The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division....

80.2K

Verified Solution

Question

Accounting

image
image
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $30 per unit. Variable costs for the casing are $12 per unit and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 13,000 units to the Assembly Division at a price of $23 per unit. Assume that the Molding Division has excess capacity, but the Assembly Division requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $25. Required: 1. Should the Molding Division accept the $23 transfer price proposed by management? 2. Determine the minimum transfer price that it will accept 3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the minimum transfer price that it will accept. Minimum Transfer Price The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $30 per unit. Variable costs for the casing are $12 per unit and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 13,000 units to the Assembly Division at a price of $23 per unit. Assume that the Molding Division has excess capacity, but the Assembly Division requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $25. Required: 1. Should the Molding Division accept the $23 transfer price proposed by management? 2. Determine the minimum transfer price that it will accept. 3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer Complete this question by entering your answers in the tabs below. Required 1 Required 2 Repuired 3 Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. (Round your answer to 2 decimal places.) Mutually Beneficial Transfer Price

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students